OK-SAFE, Inc. Blog

July 3, 2012

Supreme Court Decision on the Affordable Care Act

OK-SAFE, Inc. – On June 28, 2012 the Supreme Court of the United States struck down the “individual mandate” contained in the Patient Protection and Affordable Care Act, (PPACA), aka “ObamaCare”.

At least, some of the Supreme Court Justices struck down the individual mandate, others did not.

The Court’s Opinion is divided into Parts I through IV, each with a decision, with the opinions rendered via different pairing of Justices.  Scalia, Kennedy, Thomas, and Alito, JJ., filed a dissenting opinion.  The dissenting opinion is where the controversial exchanges are cited.

Justice Roberts wrote that the commerce clause of the U.S. Constitution cannot be used to compel an individual to purchase something, whether that something is a product or a service.  This includes health insurance.

Roberts went on to render an opinion that the “penalty” described in the Affordable Care Act is in reality a “tax”.  The Court did affirm that Congress does have taxing authority under the Constitution – and taxing us is apparently what Congress aims to do.

The opinion reads, in part, “The Affordable Care Act’s requirement that certain individuals pay a penalty for not obtaining health insurance may reasonably be characterized as a tax.  Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”[1]

The U.S. Congress is now in the uncomfortable position of being caught in a very big lie about the true effect of “ObamaCare”, which was never really about caring for health.   What the Affordable Care Act has done is set out the parameters for a complex series of interconnected information technology systems; insurance exchanges (voluntary, by the way) that fundamentally redesign the insurance industry; and (apparently) set up an onerous taxing mechanism.

The Court also seems to have struck down the penalty to States that choose not to participate in the Medicaid expansion program “by taking away their existing Medicaid funding.”  The Government argued that this expansion was a modification of the existing program, but Justices Roberts, Breyer and Kagan disagreed, stating that the “expansion accomplishes a shift in kind, not merely degree. The original program was designed to cover medical services for particular categories of vulnerable individuals.  Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire non elderly population with income below 133 percent of the poverty level. ”[2]  (Bold and italics added throughout.)

Roberts further declared, “A State could hardly anticipate that Congress’s reservation of the right to “alter” or “amend” the Medicaid program included the power to transform it so dramatically. The Medicaid expansion thus violates the Constitution by threatening States will the loss of their existing Medicaid funding if they decline to comply with the expansion.[3]

Health Insurance Exchanges and Their Federal Subsidies

The Scalia, Kennedy, Thomas, and Alito dissenting opinion contains roughly 22 mentions of the insurance exchanges.[4] The dissent links the exchanges to the federal subsidies (again, voluntary) and reads, in part, “The ACA requires each State to establish a health ­insurance “exchange.” Each exchange is a one-stop mar­ketplace for individuals and small businesses to compare community-rated health insurance and purchase the policy of their choice. The exchanges cannot operate in the manner Congress intended if the Individual Mandate, Medicaid Expansion, and insurance regulations cannot remain in force. The Act’s design is to allocate billions of federal dollars to subsidize individuals’ purchases on the exchanges.”[5]

Regarding the insurance exchanges, these are intended to plug into the health information exchange “network of networks” currently being established in the states, including Oklahoma.[6]

The dissent continues, “Individuals with incomes between 100 and 400 percent of the poverty level receive tax credits to offset the cost of insurance to the individual purchaser. By 2019, 20 million of the 24 million people who will obtain insurance through an exchange are expected to receive an average federal subsidy of $6,460 per person. See CBO, Analysis of the Major Health Care Legislation Enacted in March 2010, pp. 18–19 (Mar. 30, 2011). With­out the community-rating insurance regulation, however, the average federal subsidy could be much higher; for community rating greatly lowers the enormous premiums unhealthy individuals would otherwise pay. Federal subsidies would make up much of the difference.”

“The result would be an unintended boon to insurance companies, an unintended harm to the federal fisc, and a corresponding breakdown of the “shared responsibility” between the industry and the federal budget that Congress intended. Thus, the federal subsidies must be invalidated.”

Further, “Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges, and some insurers may be unwilling to offer insurance inside of exchanges. With fewer buyers and even fewer sellers, the exchanges would not operate as Congress intended and may not operate at all.”

The insurance exchanges continue to be a problem, but despite the warnings and the evidence of their failure (Utah), proponents continue to advocate for their establishment.  Perhaps this is due to the expectation that an insurance exchange would result in “an unintended boon to insurance companies”?

OK-SAFE maintains its’ position against the establishment of an insurance exchange in Oklahoma, state-based or otherwise.

Endnotes:[1]National Federation of Independent Business v. Sebelius, page 44. Page 50 of the pdf.

[2] Ibid, page 5

[3] Ibid, page 5

[4] Ibid. pp. 52-63 of the Scalia, Kennedy, Thomas, and Alito, JJ., dissenting. Pp. 178 – 189 of the pdf

[5] Ibid, page 59 of the dissent.  Page 185 of the pdf.

[6] The information exchange works via information technology (i.e. computers) systems that connect the patient, the provider and the payer, where the payer means the insurer. The American Recovery and Reinvestment Act, or ARRA, which passed in 2009, was the real health care reform law, funding the creation of an electronic health record on everyone, and the necessary information exchanges for data sharing.  Oklahoma took $8.8 million to set up Oklahoma’s exchanges.  Created in 2010, the Oklahoma Health Information Exchange Trust, or OHIET, is busy setting this up in this state The insurance exchange detailed in PPACA fits into this “network of networks”, linking the patient, the provider, and the payer into one interconnected system.  There is only one exchange system and it i the federal system.  There is no such thing as a state-based exchange that is functionally different than the one designated in ObamaCare.  See the Model is the Message diagram at http://www.exposinghealthcareform.com

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August 12, 2011

Appeals Court Rules Individual Mandate is Unconstitutional

The 11th Circuit Court of Appeals has ruled against the individual mandate called for in the controversial Patient Protection and Affordable Care Act, aka “Obama Care”, passed in March 2010.  (Read full opinion here.)

OK Attorney General Scott Pruitt’s reaction to this decision is noted below the AP announcement.

From the Associated Press,  8/12/11:

“Appeals court strikes health insurance requirement

Legality of the individual mandate is expected to go to the Supreme Court

By Greg Bluestein, AP 8/12/11

Washington – A federal appeals court panel on Friday struck down the requirement in President Barack Obama’s health care overhaul package that virtually all Americans must carry health insurance or face penalties.

The divided three-judge panel of the 11th Circuit Court of Appeals struck down the so-called individual mandate, siding with 26 states that had sued to block the law. But the panel didn’t go as far as a lower court that had invalidated the entire overhaul as unconstitutional.

The states and other critics argued the law violates people’s rights, while the Justice Department countered that the legislative branch was exercising a “quintessential” power.

The decision, penned by Chief Judge Joel Dubina and Circuit Judge Frank Hull, found that “the individual mandate contained in the Act exceeds Congress’s enumerated commerce power.”

“What Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die,” the opinion said.

Circuit Judge Stanley Marcus disagreed in a dissent.”

The AP article continues:

“The states urged the 11th Circuit to uphold Vinson’s ruling, saying in a court filing that letting the law stand would set a troubling precedent that “would imperil individual liberty, render Congress’s other enumerated powers superfluous, and allow Congress to usurp the general police power reserved to the states.” ”

Rest of AP article is here.

Oklahoma A.G. Scott Pruitt’s Reaction:

Pruitt Applauds Ruling on Federal Health Care Law 08/12/2011

OKLAHOMA CITY – Attorney General Scott Pruitt released a statement in support of the ruling by the U.S. appeals court: “I am pleased the 11th circuit ruled today that the federal government cannot force Americans to buy health insurance. “Indeed, the ruling affirms and strengthens Oklahoma’s… more

____________________________________________________________________________________________________

So Where Does That Leave Oklahoma’s Health Insurance Exchange?

A joint legislative committee created by the Oklahoma legislature in May 2011 is to examine the impact of PPACA on Oklahoma. The committee will begin its’ series of 5 meetings in September 2011, with the first one scheduled for Wednesday, September 14, 2011 in Oklahoma City, OK. (Time and location to be determined.)

The subject likely to take center stage is the terrible, horrible, no-good, very bad Health Insurance Exchanges.  These exchanges, or so-called clearinghouses, are a cornerstone of the  ObamaCare nightmare and most people can see the problems with their establishment.

The ones to be convinced, of course, are the legislators, who have to make a decision on how to move forward – follow the will of the people and common sense, or establish a state-based exchange.

The 8/2/11 House press release on this committee is below, including a list of the committee members.

Health care law committee to begin work
8/2/2011 11:09:00 PM

Jarred Brejcha
(405) 521-5605 desk
brejcha@oksenate.gov

John Estus
(405) 962-7674 desk
john.estus@okhouse.gov

OKLAHOMA CITY (August 2, 2011) – Legislative leaders today announced membership and meetings of the Joint Committee on Federal Health Care Law, a special legislative committee that will study how the new federal health care law affects Oklahoma.

Senate Pro Tem Brian Bingman and House Speaker Kris Steele ordered the formation of the joint committee this past legislative session to ensure Oklahoma properly addresses the Federal Patient Protection and Affordable Care Act.

At the direction of co-chairmen Sen. Gary Stanislawski, R-Tulsa, and Rep. Glen Mulready, R-Tulsa, the Joint Committee on Federal Health Care Law will do its work through a series of public meetings in Oklahoma City and Tulsa.

The committee’s first meeting will be Sept. 14 in Oklahoma City. The committee is expected to meet at least five times through November.

“Having suitable health care options in Oklahoma is an issue the Legislature takes very seriously and intends to proactively protect and address through this committee,” said Stanislawski, a Certified Financial Planner. “Oklahoma patients, taxpayers, businesses, health practitioners, insurers and others all have wide-ranging questions and concerns about this largely unwanted new federal law. The law will affect all Oklahomans, some in significant ways, so this committee will seek to address all relevant questions and concerns for the benefit of all Oklahomans.”

Among the topics to be studied are the state of health care in Oklahoma, logistics and ramifications of implementing the federal health care law, implementation timelines, responses to the law and the costs local governments and businesses may face as a result of the law.

The committee will also explore the implications Oklahoma’s lawsuit challenging the law’s constitutionality may have on the law’s implementation here.

“Clearly, most Oklahomans oppose this law. While we have taken steps to guard against harmful portions of the law, we would be remiss if we did not continue reviewing it so we can do our best to protect a choice-based, free-market health care system for Oklahomans,” said Mulready, a 28-year insurance industry veteran. “Simply put, the committee will show Oklahoma what to expect from this law, how we can continue to protect Oklahoma’s interests and how we can make sure we are best prepared as a state.”

The committee will solicit testimony and recommendations from a wide range of public and private sector experts. It is expected to hear from state and federal policymakers, business officials, insurance agents and brokers, legal experts, health care industry officials and more.

“All parties will be at the table working to make sure Oklahomans have health care choices, not mandates,” said Bingman, R-Sapulpa. “This is an opportunity for Oklahoma to assert our state’s rights and I’m confident all stakeholders will rise to the challenge so we can avoid dangerous federal mandates wherever possible.”

Ultimately, the committee will make recommendations on how the state should address components of the federal health care law.

“The committee will explore all possibilities for putting forth Oklahoma solutions that support a free market health care system,” said Steele, R-Shawnee. “Not everything is clear about this law, and most of us don’t like it, but what we do know is Oklahoma cannot afford to be caught flat-footed, unprepared and unprotected if it takes effect. As much as anything else, this committee ensures Oklahoma is prepared.”

Committee members are:
Sen. Gary Stanislawski, R-Tulsa, co-chair
Rep. Glen Mulready, R-Tulsa, co-chair
Sen. Cliff Aldridge, R-Oklahoma City
Sen. Bill Brown, R-Broken Arrow
Sen. Brian Crain, R-Tulsa
Sen. Sean Burrage, D-Claremore
Sen. John Sparks, D-Norman
Rep. Doug Cox, R-Grove
Rep. Randy Grau, R-Edmond
Rep. Jason Nelson, R-Oklahoma City
Rep. Jeannie McDaniel, D-Tulsa
Rep. Danny Morgan, D-Prague

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